Onix Follows in OMM's Footsteps
In spite of having raised $77.5 million only a few months ago, Onix Microsytems Inc. yesterday scaled back its operations in response to the continuing gloomy outlook for startups making optical switching subsystems.
The company put development of 3D MEMS (micro-electro-mechanical systems) on the backburner and laid off 25 percent of its 150 workers. CEO Steve Panyko says the market for 3D MEMS subsystems has "shifted to the right by one or two years" and, as a result, it didn't make any sense to carry on developing a product of this type at the moment. Instead, Onix will focus its efforts on developing 2D MEMS subsystems.
In doing this, Onix is following in the footsteps of OMM Inc., which shelved its 3D MEMS developments and shed 100 employees a month ago (see OMM-inous News).
In both cases, the fundamental problem is that it's very tough to know when the market for their optical switching modules will revive, partly because the startups sell to system vendors -- not to the service providers that generate demand for their products. This applies to 2D as well as 3D MEMS subsystems, although startups are loath to acknowledge this.
OMM is further ahead than Onix in developing 2D MEMS modules. It's shipping them, while Onix's modules are still under development. All the same, Onix figures it's got some advantages over OMM on two counts -- technology and manufacturing strategy. "It's not always the first to market that ends up being one of the winners in the long term," notes Meng-Hsuing Kiang, Onix's founder and director of business development.
Onix uses electomagnetic force to turn its arrays of tiny tilting mirrors, while OMM uses much weaker electrostatic forces. Electromagnetic systems have much lower power requirements, according to Kiang. Conrad Burke, OMM's senior VP of marketing and business development counters that OMM chose electrostatic technology "because it promised to make a more reliable and robust product."
Kiang also makes a big thing out of Onix's strategy of outsourcing the manufacturing of its MEMS fabric to Analog Devices Inc. (NYSE: ADI). It's using a similar strategy for packaging its modules, outsourcing the task to a heavyweight company in that field. OMM's Burke calls this is recipe for problems: "The technology isn't outsourceable," he says, contending that having manufacturing expertise in house is essential.
— Peter Heywood, Founding Editor, Light Reading